Italy’s A2A to dismiss CEO of Montenegrin energy firm EPCG over KAP-linked losses

By bne IntelliNews October 11, 2013

Italy’s A2A, which manages Montenegrin energy producer EPCG, plans to dismiss its CEO by the end of 2013 because of the losses EPCG will suffer due to aluminium firm KAP’s bankruptcy, an unofficial report of daily Vijesti says.

EPCG failed to disconnect the power supply to KAP in the past three years even though the company regularly left its bills unpaid – but only sent it notices and warnings that produced no effect. As a result, when KAP entered insolvency in July, EPCG ranked its third largest creditor with claims worth EUR 44.9mn. As it came clear this month, KAP will be hardly sold at a price adequate to meet the demand of its creditors (valued in the range of EUR 360-460mn) and most of them will likely have to write them off.

According to Vijesti, current CEO Enrico Malerba will be replaced by Stefano Pastori, who already visited Montenegro earlier this month to meet the Montenegrin ministers. A2A has proposed him for the post in agreement with the government in Podgorica and Pastori is expected to take over the post after EPCG’s Oct 28 shareholder meeting.

A2A runs the management of EPCG and has a 44% stake in it but the government controls the majority 55%. The remainder belongs to smaller shareholders.

According to Vijesti’s report, the change in EPCG’s management will probably also include the dismissal of the chief financial officer – Flavio Bianco.

The current management will leave behind some EUR 45mn worth of unpaid taxes and contributions to the state – and because their value coincides with the size of KAP’s unpaid bills, there have been speculations for months that the management and the government have agreed to trade EPCG’s tax debt for new power supply deal for KAP.

Furthermore, the government even tried to revise this year’s budget in order to transfer KAP’s unpaid electricity bills to the tax payer – but the attempt failed and even threatened to shake down the ruling coalition.

On the other hand, Vijesti reminds that Malerba is also leaving behind EPCG’s controversial deals for legal and consulting services signed without a tender with its associated company A2A and worth at least EUR 7.5mn. The case is expected to be reviewed at court in the coming period.

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